NuLoch Resources Inc.
OTCQX : NULCF
TSX VENTURE : NLR

NuLoch Resources Inc.

January 19, 2011 09:42 ET

NuLoch Resources Inc. to be Acquired by Shale-Focused Magnum Hunter Resources Corporation for $327 Million (USD)

CALGARY, ALBERTA--(Marketwire - Jan. 19, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

NuLoch Resources Inc. ("NuLoch") (TSX VENTURE:NLR) (OTCQX:NULCF) is pleased to announce that it has entered into a definitive agreement (the "Agreement") to be acquired by Magnum Hunter Resources Corporation ("Magnum Hunter") (NYSE:MHR and NYSE AMEX: MHR-Prc), a Houston, Texas based oil and gas company focused on unconventional shale plays.

Transaction Details

Under the terms of the Agreement, each holder of common shares of NuLoch ("NuLoch Shares") will receive either: (i) 0.3304 of a share of common stock of Magnum Hunter (a "Magnum Share"); or (ii) in certain circumstances, 0.3304 of an exchangeable share of a Canadian subsidiary of Magnum Hunter (an "Exchangeable Share") for each NuLoch Share held. Based on a seven day volume weighted average trading price of the Magnum Shares on the NYSE of US$7.63, the consideration to be received for each NuLoch Share equals CDN$2.50 per share and represents a premium of approximately 19% to the closing price of the NuLoch Shares on the TSX Venture Exchange on January 18, 2011, being CDN$2.10. The Exchangeable Shares will: (i) have voting rights, dividend entitlements and other attributes corresponding to those of the Magnum Shares; and (ii) be exchangeable, at each shareholder's option, for Magnum Shares. The Exchangeable Shares will automatically be exchanged for Magnum Shares one year from closing and upon certain other events.

The transaction will be completed pursuant to a statutory plan of arrangement pursuant to the Business Corporations Act (Alberta) (the "Arrangement"). Upon completion of the Arrangement, NuLoch will be an indirect wholly owned subsidiary of Magnum Hunter. The Arrangement may be accomplished on a tax deferred basis in Canada, but may be a taxable transaction for non-Canadian holders of NuLoch securities. Upon the closing of the Arrangement, NuLoch securityholders will own approximately 32% of the combined company on a fully diluted basis, after giving effect to the proposed acquisition by Magnum Hunter of NGAS Resources, Inc. (34% before giving effect to such acquisition). The proposed Arrangement is subject to regulatory, stock exchange, court and shareholder approvals of NuLoch and Magnum Hunter. 

NuLoch's and Magnum Hunter's respective Boards of Directors have unanimously approved the Agreement. Magnum Hunter has entered into support agreements with certain existing shareholders, including NuLoch's management, representing 37.8% of the issued and outstanding NuLoch Shares on a fully diluted basis, pursuant to which each of them has agreed to, among other things, vote in favour of the Arrangement, except in certain limited circumstances.

Complete details regarding the Arrangement are set out in the Agreement, which will be filed by NuLoch on SEDAR (www.sedar.com).

Canaccord Genuity Corp. acted as exclusive financial advisor to NuLoch and has provided the NuLoch Board of Directors with its verbal opinion that, as of the date hereof and subject to review of final documentation, the consideration to be received by NuLoch shareholders pursuant to the proposed transaction is fair, from a financial point of view, to NuLoch shareholders. Borden Ladner Gervais LLP acted as legal advisor to NuLoch.

Management Comments

R. Glenn Dawson, President and Chief Executive Officer of NuLoch, stated, "We are very pleased with this business combination. The transaction unlocks the "Real Value" of our Williston Basin assets for our shareholders and provides a unique and diversified growth platform moving forward. Magnum Hunter has a superb management team that will guide development in three leading North American shale plays: Marcellus, Eagle Ford, and now in the Bakken/Three Forks Sanish. The combined entity will use advances in horizontal drilling and completion technology to develop its significant undeveloped land base for light oil and liquid rich natural gas reserves. These leading plays are characterized with high netbacks and low finding costs. "

Conference Call Information

Magnum Hunter will hold a conference call to discuss the transaction and other related matters on Wednesday, January 19th at 10:00 AM Central Time.

Dial-In number: (866) 348-0480 (U.S. & Canada) or (706) 643-5340 (Intl./Local)

Access code: 38578345

A simultaneous webcast of the call may be accessed over the internet by visiting our website at http://us.meeting-stream.com/magnumhunterresources_011911. The webcast will be archived for replay on the Magnum Hunter website for 90 days.

About NuLoch

NuLoch is a Canadian public oil and gas company headquartered in Calgary, Alberta. NuLoch has been focused on oil shale and actively developing its large contiguous 71,000 net acre land position in the Williston Basin of Saskatchewan and Divide and Burke Counties in North Dakota. NuLoch owns various operated and non-operated working interests in approximately 67 oil wells capable of production from the emerging Bakken-Sanish Three Forks unconventional oil shale play, and has six drilling rigs currently operating across the Basin.

The company's current corporate production capability is 1,550 boe/d (85% crude oil, 69% from the Williston Basin) of which 1,070 bbls/d of productive capability is produced from 13.6 net Bakken-Sanish Three Forks wells drilled, completed and equipped. Additionally, an estimated 800 boe/d (IP30 Basis) of net potential production is behind pipe in 4.2 net wells that are being fracture stimulated or standing cased and 0.36 net wells currently drilling.

About Magnum Hunter

Magnum Hunter is a United States based, NYSE listed oil and natural gas producer headquartered in Houston, Texas. The company's predominate focus is to grow its asset base and production in unconventional resource plays, specifically the Marcellus/Huron Gas Shale and Eagle Ford Oil Shale. Magnum Hunter is actively drilling and operating in Appalachia and South Texas on significant, large and primarily contiguous acreage blocks. Magnum Hunter is also expanding its involvement in gas gathering and processing through investment in midstream assets across its Appalachia properties.

Magnum Hunter exited 2010 with approximately 2,732 boe/d of production (55% oil) and total proved reserves as of December 31, 2010 of 13.4 million boe (51% crude oil and NGL).

Barrels of Oil Equivalent

Barrels of oil equivalent (boe) is calculated using the conversion factor of 6,000 cubic feet ("6 Mcf") of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward Looking Statements

This press release includes "forward-looking statements" within the meaning of the U.S. federal and Canadian securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by such terms and phrases as "would", "may", "will", "anticipates", "expects" or "expected to" and other terms with similar meaning indicating possible future events or actions or potential impact on the businesses or shareholders of Magnum Hunter and NuLoch. Such statements include, but are not limited to, statements about the Arrangement, including statements regarding the combined company upon completion of the Arrangement, the Exchangeable Shares and the contingencies and uncertainties to which Magnum Hunter and NuLoch may be subject prior to closing the Arrangement and other statements that are not historical facts. The press release also includes information that has not been reviewed by the independent auditors of Magnum Hunter or NuLoch. There is no assurance that the proposed transaction contemplated in this press release will be completed at all, or completed upon the same terms and conditions described. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain required approvals of the Arrangement on the proposed terms and schedule; the failure of the securityholders of NuLoch to approve the Arrangement or the shareholders of Magnum Hunter to approve the issuance of the Magnum Shares to the holders of NuLoch securities in the proposed Arrangement; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the plan of arrangement may not be fully realized or may take longer to realize than expected; and disruption from the transaction making it more difficult to maintain relationships with regulatory agencies, employees or suppliers. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the periodic reports filed by Magnum Hunter with the Securities and Exchange Commission and available at the Securities and Exchange Commission's internet site www.sec.gov as well as NuLoch's continuous disclosure documents filed on NuLoch's SEDAR profile at www.sedar.com. All forward-looking statements in this press release are expressly qualified by information contained in each company's filings with regulatory authorities and subject to their obligations under applicable securities laws, neither company undertakes to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • NuLoch Resources Inc.
    R. Glenn Dawson
    President and CEO
    (403) 920-0455
    (403) 920-0457 (FAX)
    Email: nuloch@nuloch.ca
    or
    NuLoch Resources Inc.
    2200, 444 - 5th Avenue SW
    Calgary, Alberta T2P 2T8